November 2016

A significant issue for employers in establishing a defence under section 11A(1) of the Workers Compensation Act 1987, is whether its actions were reasonable.

In addressing this question does the worker’s perception of the relevant events impact on what is to be considered “reasonable”?

This is discussed in the recent decision of Edwards v Secretary, Department of Education Communities [2016] NSWWCCPD 45, 14 September 2016.

Facts & Previous Proceedings

The worker was a science teacher, teaching at a school in North Richmond from 1984.

She had trouble controlling her students. Between January 2008 and November 2011, she was subject to a number of performance management programs and was ultimately dismissed.

The worker also had a “transient paranoid ideation”, a condition affecting her day to day perceptions. This was not known to her employer at the time of her performance management and dismissal.

The worker claimed lump sum compensation for injury being the aggravation of a pre-existing adjustment disorder caused by her duties between 2008 and 2011.

After the worker had commenced proceedings, a report was obtained on behalf of the employer from Dr McMahon. Dr Mrs Edwards reaction was in part to the discipline, performance appraisal and transfer during this period [January 2008 to August 2008]. It is possible that the stress of these events has caused her to misperceive the actions of others by transient paranoid ideation common to some personality disorders aggravated by scrutiny inherent in these processes.”

Arbitrator Rimmer found there was an injury, but she was satisfied the employer had established a section 11A(1) defence for taking reasonable action in relation to performance appraisal, discipline, dismissal and transfer. Therefore the worker was not entitled to compensation.

The worker appealed the decision.

Appeal to the Deputy President

On appeal, Deputy President Michael Snell held that Arbitrator Rimmer was correct to disregard the worker’s perception of events when assessing the reasonableness of the employer’s actions pursuant to section 11A(1). He confirmed the Arbitrator’s determination that the defence was established.

In reaching his decision he made the following observations about determining what is “reasonable actions” of the employer:

The test for the reasonableness of actions of the employer is a factual issue to be assessed objectively, rather than by reference to the parties’ subjective perception of those events.

In considering whether the actions or proposed actions of an employer are reasonable within the meaning of s 11A(1), what is reasonable depends on the facts known to the employer at the time of the actions or what could have been ascertained at that time by reasonably diligent inquiries, not what may have become apparent at some later stage.

It is still necessary to consider the worker’s rights and circumstances and balance them against the employer’s objectives in determining what is reasonable, but the weight attached to those considerations depends on the facts of each case. The circumstances of the employee can include health considerations.

What this means for the test for “reasonable action”

This decision confirms that the worker’s perception of events will not ordinarily be relevant to determining whether the employer’s actions were reasonable.

However, the reasonableness of the employer’s actions is to be determined objectively and in doing this an Arbitrator must consider the circumstances of the worker (at the time of the actions) that were known to the employer or that could have been ascertained at that time by reasonably diligent inquiries. Matters that became apparent at a later time will not be relevant.

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